Rent vs. Buy
For years, buying a home was considered a sign of success but has recently become a topic of debate. Is buying a home always better than renting? The truth is there are arguments for both buying and continuing to rent, it all depends on your unique situation. Here’s a few questions to ask yourself if you’re considering purchasing a home.
How long are you planning to stay where you are?
Have you found a home sweet home or are you a little stir crazy? Purchasing a home comes with several different costs from mortgage origination to appraisal fees - it quickly adds up. The longer you remain in your house, the more time you have to spread out these costs. If you sell within a few years, your home value may not be enough to offset these costs. It’s important to stay in a house long enough to reduce your debt and to allow for your home’s value to rise. If you’re planning to stay less than three years, homeownership may not be for you.
How’s the real estate market in your area?
Is the real estate market on the rise, stagnant or in decline? People often assume that home prices always rise each year but that isn’t the case. Because owning a home is such a large investment, it’s important to know if owning a home in your area is a sound investment and how that fits into your long term plan for you and your family. Check with your local agent for a complimentary market report and compare and contrast how the market has fared over the last few years.
Are you losing money by renting?
There’s no argument against building equity by owning a home but there’s a few things you should consider before ditching renting for homeownership. Although your mortgage might be less than your rent you have to factor in other costs. Home maintenance, insurance, taxes, and other costs should be taken into account when comparing the costs of buying versus renting.
On the other hand, homes typically increase in value, build equity and provide a nest egg for the future. Your costs are predictable and more stable than renting because they're ideally based on a fixed-rate mortgage. The interest and property tax portion of your mortgage payment is a tax deduction.